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Investment Property Classifications: What You Should Know

Multi-family investment properties are assigned property classifications A, B, C, or D. Property class is determined based on characteristics such as condition, location, tenant income levels, age, rental rates, appreciation, and amenities. Similarly, areas in which properties are located are categorized into A, B, C, and D classes. Understanding a property's class and area rating are imperative for determining the success rate of your investment goals and for communicating your needs to your real estate agent.

These comprehensive descriptions of each class will help you better understand how multi-family investment properties are standardized:

“A” Class Multi-Family Properties

  • Built within the last 15 years
  • Consist of the highest income-earning tenants
  • Most amenities such as pool, playground, etc.
  • High appreciation potential
  • High rents with no deferred maintenance
  • Lowest Capitalization Rates
  • Generally owned by institutional investors

"A" Class Areas refer to newer growth areas.

“B” Class Multi-Family Properties

  • Built in the last 15-30 years
  • Mixed tenant base
  • Some amenities
  • Rents slightly lower than "A"Class buildings
  • Low deferred maintenance
  • Higher Cap. Rates than Class "A" properties
  • Appreciation Potential
  • Primarily owned by institutional investors, private investment groups, or high net worth individual investors

"B" Class areas refer to older areas with stability.

“C” Class Multi-Family Properties

  • Properties built 30+ years ago
  • Limited amenities
  • Lower rents
  • Lower occupancy
  • Lower appreciation
  • More deferred maintenance
  • Higher cash flow and Cap. Rates
  • Typically owned by private investors

"C" Class Areas are older, declining, or relatively stable areas.

“D” Class Multi-Family Properties

  • Older buildings
  • No amenities
  • High deferred maintenance
  • Potentially insubordinate tenant base
  • High Cap. Rates
  • No appreciation potential
  • Not suggested for new investors

"D" Class Areas are older, rapidly declining areas.

When searching for investment properties for sale in the Puget Sound Area, choosing a property with a class of equal to or higher rating than the area (for instance, a "C" class property in a "B" or "C" class area) will stimulate growth and appreciation potential. Familiarizing yourself with multi-family investment property and area classifications will help you to determine which properties and areas align with your investment goals.
 

Newest King County Multi-Family Property Listings:

335 SE Clark Street, Issaquah image
335 SE Clark Street, Issaquah $1,198,000

Old Town Issaquah duplex, turnkey, updated & well maintained. Quiet residential area, dead end street, perfect for first time investment or add to your portfolio. Each un...

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  • 2032040 MLS
  • ACTIVE Status
Courtesy of John L. Scott, Inc.

Listing courtesy of John L. Scott, Inc..

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1408 Orange Place N, Seattle image
1408 Orange Place N, Seattle — Bigelow's 2nd Addition $1,800,000

Very desirable 'atop the Hill' Queen Anne location! Zoned LR-1 with alley access. Surrounded by high-end residential properties & conveniently located at the top of Queen...

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  • 2030612 MLS
  • ACTIVE Status
Courtesy of Coldwell Banker Bain

Listing courtesy of Coldwell Banker Bain.

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110 W Kinnear Place, Seattle image
110 W Kinnear Place, Seattle $1,200,000

Built in the 1950s and featuring two spacious two bedroom/one bath units, the property sits in lower Queen Anne just steps away from a plethora of retail amenities. The p...

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  • 2031676 MLS
  • ACTIVE Status
Courtesy of Paragon Real Estate Advisors

Listing courtesy of Paragon Real Estate Advisors.

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543 Whitworth Avenue S, Renton image
543 Whitworth Avenue S, Renton $849,950 ▼

Downtown Renton 4-plex close to Boeing, The Landing, and 405. Renton was ranked one of the fastest growing cities. Tenants can walk to shopping & bus. Built in 1959 and e...

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  • 2031181 MLS
  • ACTIVE Status
Courtesy of Realogics Sotheby's Int'l Rlty

Listing courtesy of Realogics Sotheby's Int'l Rlty.

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9221 35th Ave SW, Seattle image
9221 35th Ave SW, Seattle $1,150,000

Come invest in beautiful West Seattle! This fully occupied four-plex makes a great current/future investment. Building includes three 2-bedroom/ 1 bath units, and one 1 b...

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  • 2030620 MLS
  • ACTIVE Status
Courtesy of Home Realty

Listing courtesy of Home Realty.

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719 N 38th Street, Seattle image
719 N 38th Street, Seattle $1,250,000

Mid-century modern duplex in the heart of Fremont. Second time on the market in 50 years. Showcased in Sunset Magazine as a paragon of mid-century architecture & efficien...

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  • 2030480 MLS
  • ACTIVE Status
Courtesy of Columbia Partners Real Estate

Listing courtesy of Columbia Partners Real Estate.

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The database information herein is provided from and copyrighted by the Northwest Multiple Listing Service (NWMLS). NWMLS data may not be reproduced or redistributed and is only for people viewing this site. All information provided is deemed reliable but is not guaranteed and should be independently verified. All properties are subject to prior sale or withdrawal. All rights are reserved by copyright.

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Sound Realty Group, Inc

6553 California Ave SW, Suite B

Seattle, WA 98136

Charles Burnett, Principal


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